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Norway's StatoilHydro ASA has announced that it will be scaling down its oil product trading activies and, as a result, would be closing its products department in Singapore from where it operates as a fuel oil trader.

"The scale down will affect our third party product trading in Singapore. The products department with its four employees will be discontinued," StatoilHydro said in a statement.

The decision comes in the wake of the current global economic downturn, which has led to plunging trading volumes and severely affected liquidity in the commodity markets. This has forced a number of traders and brokers of energy products to either look at new revenue streams or close down operations.

StatoilHydro ASA has been trading fuel oil and middle distillates from its Singapore office, but a larger percentage of its trading activities are understood to have been focused on crude oil.

Commenting on the closure, Jan K Karlsen, senior vice president of the oil trading and supply business cluster, said "The decision will not affect any of our trading activities in crude or gas liquids, the key trading areas for StatoilHydro, in addition to natural gas."

Speaking to Reuters, a company spokesperson is reported to have said that the company will focus its oil product trading operations around Europe and that there will be no job cuts as a result of the decision.